This underscores the most serious problem with reforming welfare laws. Note that more than doubling pretax income from $14,500 to $30,000 results in a loss of 28% of their net income. It would take an exceptionally rare person to go through a drastic drop in quality of life for the possibility of getting really high income and better standard of life some day way in the future.The welfare cliff is back in the news again this week with the CBO's study that showed Obamacare will cause 2 million workers to reduce their hours or leave the workforce. The previous link, on Townhall.com, links to this 2012 article by the American Enterprise Institute, "Julia's Mother: Why a single mom is better off with a $29,000 job and welfare than taking a $69,000 job". It includes this graph illustrating the welfare cliff:
That graph is showing that the situation is really worse. The welfare cliff drops off when income exceeds that $29,000 and the combined benefits and pay stays below that level until income exceeds $69,000. Combined pay/benefits climbs from $30k to $43 and then drops off even more when income goes from $43 to $44k. Going from $43 to 44 is a 2.3% raise in pay, but that leads to a roughly 23% decrease in total pay & benefits. Would you turn down a 2.3% raise if led to 23% less take home pay? If that single mother stayed sober and didn't put every dime she received up her nose, $29,000/year is the peak lifestyle on this chart until work pay reaches over $70,000/year.
While the details vary - the exact totals of pay and benefits and the exact placement of the cliffs - due to the state by state variation in these benefits, the big picture is the same. Kevin Glass, in the original Town Hall article, implies that governments have been aware of the problem for a long time and do their best to minimize the problem. Perhaps some do, but I don't believe for a moment that they all do.